A court may set aside an entry of default for good cause, and it may set aside a default judgment under Fed. R. Civ. P. 60(b). Fed. R. Civ. P. 55(c). When examining whether good cause exists, a district court should weigh whether the conduct of the defaulting party was blameworthy or culpable, whether the defaulting party has a meritorious defense, and whether the other party would be prejudiced if the default were excused.
Plaintiff trustee sued defendant chief executive officer (CEO). Defendant was served by mail and by publication but failed to appear until plaintiff moved for a default judgment. Defendant moved to set aside default. The district court denied defendant’s motion. The appellate court affirmed the denial of defendant's motion.
Was defendant able to establish good cause that would warrant setting aside default under Fed. R. Civ. P. 55(c)?
Defendant CEO had not established good cause that would warrant setting aside the default under Fed. R. Civ. P. 55(c). As the documents mailed to defendant were never returned, effective service was presumed, and defendant's mere denial that he had received the summons and complaint did not overcome the presumption. Defendant offered inadequate support to establish the viability of asserted defenses, and setting aside the default would have resulted in prejudice to plaintiff trustee given the amount of litigation that had occurred.